Demurrages paid by PSO: Senate body expresses displeasure over massive increase

The Senate Standing Committee on Petroleum and Natural Resources has expressed its displeasure over almost 10-time increase in the amount of demurrages paid by Pakistan State Oil (PSO) in the last five years. In a briefing to the standing committee, Managing Director PSO Jahangir Ali Shah said that demurrages percentage of import volume of C&F of the state company went up to 0.48 percent during 2017-18 from 0.3 percent in 2013-14. He explained that the company had been facing problems due to congestion of shipments at two ports.
The committee met under the chairmanship of Mohsin Aziz on Thursday here at the Parliament House. In his ruling, the chairman committee said the percentage of demurrages paid by PSO increased ten times. "The demurrages charges of PSO have gone to $20.4 million in 2017-18 from $2.5 million in 2013-14 which need to be curtailed," he observed.
The MD PSO said that PSO is in process of enhancing its storage capacity at Keamari and linking the Karachi Port with Port Qasim through pipeline. He further said that PSO is also engaged in development of countrywide new storages and added, "At present, PSO is working to enhance the existing storage capacity of fuel from 1 million tons to 1.27 million tons."
He accused the licensed oil marketing companies (OMCs) of Oil and Gas Regulatory Authority (Ogra) for incurring demurrages to PSO on import of POL as most of them had no storage capacity. Chairperson Ogra Uzma Adil contending the statement of the MD PSO said that each OMC was issued license after fulfilling the prerequisites set by the authority, including construction and storage capacity. She rejected the statement of the MD PSO and asked him to disclose the name of OMC which did not have storage capacity.
The chairman committee directed Director General Oil, Ministry of Petroleum and Natural Resources, to look into the claim of the MD PSO regarding OMCs storage capacity and report to the committee in two months and directed the chairperson OGRA to hold a special audit. Earlier, the MD PSO informed the committee that the PSO has storage capacity of 60,000 tons oil at ports and additional 50,000 tons capacity would be available shortly.
Responding to a question, he said the amount of demurrages was paid from the profit of the company and the consumers had not been charged. About the implementation status of recommendation of the Senate Special Committee on GIDC, the committee was informed that the special committee had recommended reducing the percentage of GIDC charged from CNG, captive power plants and fertilizer companies.
The officials of Ministry of Petroleum stated that the case has been pending in Lahore High Court and the court had also set up a committee to look into the case of GIDC. The committee recommended the Ogra to settle the matter regarding outstanding amount of late payment surcharge (LPS) to the tune of Rs 79 million against MAXCO (Pvt) Ltd, Karachi. The official of SSGCL said that the company is paying the principal amount; however, waiver of LPS is subject to approval from the Economic Coordination Committee (ECC).
The committee granted SSGCL two weeks to resolve the matter of installation of LPG-Air Mix Plant in district Musakhel, Balochistan, and inform about its current position along with the progress on the implementation of the recommendations of the petroleum committee.
Earlier, an official of SSGCL informed the committee that as per government policy, LPG-Air Mix plant could install at state land only. He was responding to Member Committee Sardar Muhammad Azam Khan Musakhel who claimed that Balochistan government had no state land in Musakhel district. The committee directed the PSO that 'queue system for tank lorries' should be followed in letter and spirit. The committee was further informed that the timeline to upgrade the fleet of tank lorries in two years will end in September 2019.
The official said that PSO follows the principle of 'first in-first out' queue system for filling and decantation of its fleet with two separate queues. Addressing the concerns about the tank lorries, Minister for Petroleum Ghulam Sarwar and the committee recommended that lorries not meeting standards should also be allowed to carry the fuel of PSO by September 2019.